PESTEL analysis of Primark enables the development and execution of strategies that align with external factors that significantly influence business operations.
Introduction and Background
Primark is a popular fashion retailer that operates under the umbrella of Associated British Foods (ABF) – a diversified international food, ingredients and retail group. Primark is known for its affordable and trendy clothing, accessories, and beauty products that appeal to a wide demographic.
The company was founded in Dublin, Ireland in 1969 and initially operated under the name Penneys. It quickly expanded across Ireland and then into the United Kingdom in 1973, where it adopted the name Primark to avoid confusion with the American retailer J.C. Penney. Since then, Primark has expanded its operations across Europe, and more recently into the United States and other international markets.
Primark’s success can be attributed to its strong value proposition of offering high-quality, stylish products at affordable prices. The company has also gained a reputation for its commitment to ethical and sustainable practices, including its partnership with the Better Cotton Initiative and its efforts to minimize its environmental impact through its Primark Cares initiative.
As of 2021, Primark operates over 380 stores in 14 countries and employs over 75,000 people. With its continued focus on innovation and customer-centricity, Primark is poised for further growth and success in the global retail market.
Company Information
| Information | |
|---|---|
| Company Name | Primark |
| Parent Company | Associated British Foods |
| Founded | 1969 |
| Headquarters | Dublin, Ireland |
| Products | Clothing, footwear, accessories, homeware |
| Number of Stores | Over 390 |
| Countries with Stores | 14 (as of September 2021) |
| Revenue (2020) | £7.8 billion |
| Number of Employees | Approximately 70,000 |
Political Factors
Analyzing political factors is crucial for any business before making decisions as it can have a significant impact on business operations and the future. Government policies can affect the priorities of local companies. While Primark operates successfully in the US, UK, and Irish markets, it needs to establish partnerships to expand into countries like China.
Primark adheres to all trade, currency fluctuation, and employment policies in different countries, as it is known for providing high-quality goods at low prices (Austin, 2021).
Economic Factors
Analyzing the economic situation of a country is essential as the price sensitivity of people is greatly affected by it. During times of inflation, people tend to buy cheaper products. Primark’s business is highly affected by recessions, and consumers may look for cheaper options than Primark. The cost of production has increased due to rising labor and material costs caused by inflation, which is a concern for shareholders. Nonetheless, Primark remains the best company that provides quality products at lower prices than its rivals. It considers changing market patterns and produces enough quantity to meet consumer demand (Blogspot, 2021).
Social Factors
Analyzing social factors helps businesses to understand the demographic changes that affect consumer purchasing power and decisions. This is an essential force for businesses, and it helps them conduct further research, develop processes, and introduce new products. Primark offers a wide range of products for all ages at low prices, but the current trend of DIY clothes and sewing may pose a challenge. Since Primark produces most of its clothes in low manufacturing facilities, it needs to expand its retailing and manufacturing facilities to other countries to diversify the risk of reduced revenue (Paul, 2019).
Technological Factors
Technological factors help businesses to analyze their ability to use and adopt the latest technological advancements to improve their performance and operations. Multiple innovations can improve product quality and transactional efficacy. Primark offers low prices and bears low costs, which has hindered its expansion into the online market. By not selling through online platforms, Primark is missing an opportunity as online sales in the UK are rapidly growing (Austin, 2021).
Environmental Factors
Environmental factors significantly impact Primark’s sales. Unstable weather conditions in the UK deter customers from purchasing seasonal clothing. If suppliers buy in bulk, they may risk holding inventory. Furthermore, people are now looking for more sustainable and environmentally friendly products, which are difficult for Primark to sell at low prices (Paul, 2019).
Legal Factors
Primark needs to consider various legal factors in its business operations. EU legal implications arise when trading with EU countries and countries covered by EU agreements. Primark has entered into a legally binding agreement to finance and improve working safety in Bangladesh (Paul, 2019).
Conclusion
Primark is a top clothing company in Ireland, the UK, and the US, offering high-quality clothing at low prices. Based on the PESTEL analysis, Primark should expand its business operations in other countries to diversify risks and increase revenue. It should also consider selling through online platforms, as many people prefer to shop online
References
- Austin, C, 2021. Primark PEST analysis. [Online], Available at: https://creately.com/diagram/example/hudu336o1/primark%20pest%20analysis, [Accessed on: 6th April, 2021].
- Blogspot, 2021. PESTEL analysis of Primark. [Online], Available at: http://research-topics.blogspot.com/2011/09/pestle-analysis-of-primark-in-uk.html, [Accessed on: 6th April, 2021].
- Paul, E. 2019. Financial analysis of Primark Stores ltd with regard to a stock exchange. [Online], Available at: https://www.researchgate.net/profile/Paul
- Eisenberg/publication/330676430_Financial_Analysis_of_Primark_Stores_Ltd_with_regard_to_a_Stock_Exchange_Floatation_IPO/links/5c4ef048299bf12be3e9424f/Financial-Analysis-of-Primark-Stores-Ltd-with-regard-to-a-Stock-Exchange-Floatation-IPO.pdf, [Accessed on: 6th April, 2021].
- Primark, 2021. About us. [Online], Available at: https://www.primark.com/en/aboutus, [Accessed on: 6th April, 2021].